Plenty of froth over coffee prices

By ROSALEEN MacBRAYNE and IRENE CHAPPLE

That $3 flat white at your local cafe probably contains less than 80c worth of materials.

But cafes say they are not creaming off large profits.

The rest of the cost is wages, rent and overheads.

The business of coffee has once again been in the spotlight after campaigns by action groups such as Oxfam that highlight the poverty of some Third World coffee growers.

The price of coffee has been falling internationally because of a glut of beans, but that has not flowed through to New Zealand caffeine drinkers, says Consumers Institute chief executive David Russell.

He has no "hard information" but thinks the mark-up on a cup of coffee is huge and suggests we are paying for "decor and pretension".

But the national president of the Restaurant Association, David Meagher, says coffee is only a small part of it.

The beans, the milk and sugar are a fraction of the cost. He estimates 70c to 80c. Making it and service are labour-intensive.

He says coffee is only good if someone makes it well, and baristas don't come cheap.

Pay rates of $15 an hour are not uncommon, with penalty rates on public holidays. Overheads include the day-to-day costs of running a business: rent, rates, electricity, water, machinery maintenance, staff training and uniforms.

Coffee to go means an extra 30c for a paper cup and lid.

Mr Meagher says a Restaurant Association survey showed most cafes were owner-operated and less than 5 per cent of their turnover was net profit.

Rents were high and some cafe owners paid a percentage of their turnover to the landlord.

"It's a bit of a fallacy to say it costs less than $1 to make a cup of coffee and put it on the table. You've got to turn over a lot of cups of coffee to make money," says Mr Meagher.

He owns Starks cafe and bar in the foyer of the Civic Theatre in central Auckland.

Mr Meagher admits his clientele also pay for the ambience, including a warm welcome, friendly staff and pleasant music.

In turn, they may buy a sandwich, a muffin or even a juice to go with their coffee, pushing up his profits.

In Tauranga, busy cafe restaurant Bravo in Mid-City Mall sells about 300 cups of coffee a day. At $3 each, duty manager Claire Gregory estimates about one-third of that is profit.


The beancounter

Costing a cup of coffee

AUCKLAND

* Gloria Jean's

Long black: $2.75, $3.25, $3.95

Flat white: $2.95, $3.60, $4.25

Cappuccino: $2.95, $3.60, $4.25

* Columbus Coffee, High St

Long black: $3, $3.50

Flat white: $3.50, $4

Cappuccino: $3.50, $4

* Robert Harris, Queen St

All $3

* Starbucks, Downtown Centre

Long black: $3.30

Flat white: $3.95, $4.95, $5.50

Cappuccino: $3.60, $4.60, $5.15

* Sierra Pronto, Ponsonby Rd

All $3

* Circus Circus, Mt Eden Rd

All $3

* Madison Coffee, 277 Broadway, Newmarket

All $3

* Dunk, Parnell Rd

All $3

HAMILTON

* Scotts Epicurean, Victoria St

All $3

TAURANGA

* Bravo, City centre

All $3

WELLINGTON

* Bellamy's, Parliament Buildings

All $2.50 regular, $3 for large

CHRISTCHURCH

* Airport

All $3 cup, $3.50 mug

DUNEDIN

* Airport

Long black and flat white: $3

Cappuccino: $3.80